Buying a Home
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Types of homes available:
• Single Family House
The single family house is the “typical” American home.
Single family homes offer the most privacy and freedom.
The two family house is great for people who want additional income
because the second part of the house is rented out.
Condos are most attractive to younger homeowners who do not intend
to raise a family soon and who do not need the extra privacy and
open space of a single family home. They are also ideal for older
individuals who do not have time or energy to maintain the outside
areas of their homes. They are actual ownership of a particular
unit. They have deeds and monthly fees which consist of individual
property taxes and common charges. Common charges are collected
to help maintain the common elements within condominium. The Condo
Board/ Association oversees the common interests, and acts as a
supervisory board for the condominium. Some Boards reserve the right
to set financing requirements for the building. Some condos do not
own land that they have been built on and are thus termed to have
a land lease. Battery Park City in Manhattan is a good example,
where the land is leased from the City.
CO-Ops are known as ownership to stock in the corporation which
in turn owns real estate. You personally do not own real property.
There is no deed. Instead the borrower is responsible for paying
maintenance to the coop. This monthly fee covers the cost to operate
the coop, including payments made for buildings underlying mortgage.
Your monthly contribution will depend upon the number of shares
Coop boards play a much greater role in building regulation than
condo boards. Unless purchasing an apartment directly from the sponsor,
the borrower is required to go before the coop board for approval
into the building. A coop board can reject a borrower for any reason
with no explanation needed. There are many unfortunate instances
where a borrower is approved for a mortgage and than gets rejected
by the coop board. Coops usually set an LTV limit as to the financing
allowed in the building. This generally ranges from as much as 50%
down payment to as little as 10%.
A townhouse is somewhat between a condo and a single family house.
Homeowners associations govern them, and there are usually strict
rules about the outward appearance of each townhouse. Advantages
of townhouses are that the homeowners association may provide security
services and will usually take care of your outside gardening. Because
your unit will not be attached to as many other units, you will
probably be liable for possible damage to less common property
When you pay rent it’s like flushing your money down the toilet.
It’s pure income for the landlord. But if you buy a house,
you are making an investment in equity. It’s like opening
a savings account. Every dollar that you pay as your monthly mortgage
principal payment is a dollar you put away in your new savings account.
The appreciation you get in your house is like interest paid to
you in your savings account. Historically, American homes overall
have gone up on an average of about 8% annually. If you decide to
sell or refinance the house you get equity back. Consider it as
withdrawing your savings from that savings account.
By paying a mortgage payment the government allows the interest
paid on your loan to be tax deductible; it’s like you never
earned that money for income tax purposes. Your annual property
taxes are also completely tax deductible as well as the bank origination
fees that you pay when buying a house.
When renting a place, the fact of the matter is that you are living
in someone else’s house Landlords show the apartment when
you aren’t around or have other people over, like the plumber
sometimes without letting you know before hand. But when you buy
a house, it is your castle. American law places so much emphasis
on the property of homeowners that you could shoot and kill anyone
who does intrude on your property if you think that the intruder
might hurt you.
Have you ever read your lease agreement? It probably prohibits visitors
from staying more than a few days, pets, aquariums, waterbeds, commercial
activity, illegal activity, painting, and wallpapering, hanging
pictures on the wall, loud noises, objects of unusual size and dimensions,
and bicycle storage. If you violate any of these rules the landlord
may evict you.
But if you buy your house, you decide what the
Maintenance can be a discouraging factor when thinking of buying
a house. If the sink in your house is clogged up or a fuse blows,
you cannot call the landlord to get it fixed. You have to do it
yourself, because you are the homeowner and that would incur an
unexpected expense. On the upside of course, you wouldn’t
have to wait three weeks to get it fixed by the landlord.
When you own your home, you are responsible for paying the property
taxes yourself. So that the local government can pay for things
like public schools, streetlights, and road repair. When renting
some people don’t realize that because the landlord charges
only one monthly payment, which is not broken down into detail.
Some renters carry renter’s insurance, which protects against
misfortunes like theft or destruction of your personal property
in the apartment. When buying a house you must also buy a home owner’s
insurance (HOI), it protects the house in case of fire, flood (sometimes
require a separate policy solely for floods), tornadoes, personal
injury on the premises. This insurance might cost slightly more
than renters insurance.
This is probably the biggest concern for most new homeowners. A
renter who wants to move just has to wait until his/her lease expires.
But a homeowner must sell his/her house first and in some market
conditions that might be a difficult task. So before you buy a house
make sure that you are financial and more importantly emotionally
with buying a house
Home Inspection Fees $200 - $500
Appraisal Fees $350 - $1000
Attorney Fees $750 min
Realtor Fees $ varied percentage
Bank Fees $ varied percentage